In the year 2013, the body that governed almost all of the financial service providers in the UK was known as the FSA.
The FSA was dissolved in April 2013.It was then split into two bodies the FCA and the PRA.
The FCA (financial conduct authority), is the body that now regulates the financial companies in the United Kingdom and how they operate.
Though the body was formed by the government, it works independently of the UK government.
The FCA is mandated with maintaining a favourable and stable financial market in the UK. The financial regulator gains its money by placing fees on all the major financial bodies in the UK. Large institutions such as banks and Insurance providers fall under this category.
The FCA, therefore, pays a significant role in how the insurance companies conduct themselves in the UK.
When it comes to car insurance covers specifically, the FCA has many functions. Listed below is how the financial regulator is a part of your vehicle insurance cover:
The FCA determines whether a cover offered by various companies is a contract of insurance.
A contract of insurance is one in which the consumer will receive some compensation from the product provider in the case that an unforeseen incident should occur in future.
We could say that the FCA works as a prefect of some sorts for financial companies in the UK.
It keeps them in check and ensures quality services are provided to the consumers. The financial regulatory body keeps the UK financial market stable and sound. They create an environment that allows financial advisors and systems to remain resilient.
The FCA, therefore, is the body responsible for giving authorization to large insurance companies that offer products to the ordinary citizen such as your car insurance.
The advantage of buying an insurance cover from an authorised provider are:
- The firm has to adhere to proper market conduct.
- The consumer can cancel a policy within a fortnight of purchase.
- Company must conduct its business with care and diligence
- The firm must handle conflict of interest in a fair manner.
- The firm must always ensure it has adequate finances. This is important especially when you go to claim your insurance provider for compensation.
- Proper communication to clients. The firm in question must provide all new information regarding products that they offer. The company also must provide said information in a way that is transparent to the consumer.
Before the FCA came in to regulate these institutions, most of the companies were misleading the consumers by putting up near false promotions of their products. The FCA makes sure you get what you paid for. They have therefore prevented so many scams and duped customers by big financial firms.
If the cover you are thinking of buying is a company that is not FCA-authorised, you may be duped or let down in future.
Your car is something you use most of the time, and anything can happen on the road. The FCA makes sure you understand what you have paid for and provides a platform to report scam firms via their website.